Before covering the salient points of today, I’d like quickly to refer back to David Gauke’s keynote on the first day. Some of the numbers mentioned seemed mind-boggling to say the least but, listening to the BBC’s World at One today reference was made to a report just published on the cost to the government so far of the pandemic. The figures mentioned on the radio were almost identical to those Gauke shared yesterday morning. That 7p rise in the basic rate of income tax won’t go away!
The second day of the conference was much more industry-specific with presentations on; aviation and aerospace, property and construction and the food supply chain.
Running through all of these presentations was the underlying feeling that things haven’t been as bad, or are recovering better than many of us had feared. Even in the aviation sector where there has been a marked increase in flights in the last 6-8 weeks so while we are still only 60% of the level at the start of the year but double what it was in April.
For landlords the news isn’t good. According to Mark Bayley, only 18% of rents due were collected on the June quarter day and as the number of retail closures appears to gather pace, we have already reached 70% of 2019’s total after just half the year.
Some landlords are being understanding and creative in their discussions with their tenants, allowing a change to monthly payments, or moving to a turnover-linked rent formula. Others are looking to change use with many exploring the possibility of converting to residential.
For Turnaround practitioners the message was clear. Open discussions with your landlord at the earliest opportunity, provide an open, honest assessment of what is affordable using a well-prepared cash flow and always ask for an initial rent holiday.
The penultimate session looked at the current debt and equity landscape. From the numbers shared, it is clear that the various government schemes have had a beneficial impact on the level of debt businesses have needed to survive lockdown. This is not surprising when you consider that tax deferrals are currently more than £40bn.
The challenges ahead are as significant for the funders as businesses. As the deferred payments starting to be reinstated and the government loans begin to be repaid, banks will need to be clear on what government policy is for deferral of those payments. And ensure the rules are consistently applied.
But my biggest takeaway came near the end of the day. As a turnaround professional I am acutely aware that it is essential to focus on the human side of the role, not just the number-crunching. Being in business can be a pretty lonely place at the best of times but with lockdown and social distancing that loneliness is even greater. One of the most significant needs many businesses have at present is a ready supply of emotional intelligence, something I for one have always tried to bear in mind. Something I will re-double my efforts to address over the coming months.
Thank you IfT for an informative, stimulating and very well put together conference. More of the same, please.
